When starting a new business, you will need to decide the type of legal business entity it will be. The type of business structure will have a significant impact on many different areas of the company including taxes, liabilities, and more. Making the right decisions will save you a lot of time, money, and hassle down the road. However, as your business grows, it may be appropriate to change how it is structured. When this is the case, we can help with business restructuring as well.
What Are the Business Entity Options
Whether you are just starting your business or you have been growing for years, you will have to choose how the business is structured. There are several different options to choose from, each with advantages and disadvantages. The choices are:
• Sole Proprietorship – This is where you are the only owner of the business. You’ll be responsible for everything related to the business, and any profit will be taxed like income.
• Partnership – A partnership is quite similar to a sole proprietorship except there are two or more owners that split the responsibilities as well as the benefits of ownership.
• Limited Liability Company (LLC) – An LLC creates a legal barrier between you and your business so you aren’t financially responsible for the actions of the business. This type of business also lets you choose to either be taxes like a corporation or like a sole proprietorship in most cases.
• C-Corporation – As a business grows, a c-corp may be a great option. This entity type makes it easier to raise venture capital, introduce investors and owners, and much more.
• S- Corporation – An S-Corp is similar in many ways to a C-Corp, but it is tailored more for smaller businesses. There are certain tax benefits to this option over a sole proprietorship or partnership.
There are many factors that you will want to consider when weighing the pros and cons of each of these business entity types. For most people, it will be best to talk with an accountant about your business so they can help you to find the right option for your specific situation.
Restructuring Your Business
While it is very important to structure your business properly right from the start, you’re prone to your decision indefinitely. Most businesses will grow and change over time, and in some cases that can make it so you want to adjust your business entity. It is quite common, for example, to move from a sole proprietorship to an LLC as your company grows and expands. If you get sufficiently large, you’ll likely want to become a C-Corporation. The best way to ensure this is done properly, and at the right time, is to work with an experienced accountant.
We are Here for You
Whether you’re just starting to think about creating a legal business entity, or you have been operating for many years, our team is here for you. We regularly help businesses choose the right structure and get all the legal paperwork done on their behalf. If you would like to speak with an accountant about your business, please give us a call at 718-871-8250.